UK Farmers

[SunQueen24]

Can someone please explain to me what today is all about?

Farmers are doing a peaceful demonstration. They are angry and upset that I stead of being able to hand down farms in their entirety free of CGT RR changed things in the budget so now a lot of small farmers will have to sell off some land to pay CGT and there are such small margins in farming that it will make many farms left be unviable so will be sold. It's jeopardising our food security. RR stated only a few farms would be hit but she's wrong most farms will be hit to some extent. Farmers are land rich but cash poor. Also when the farm gets valued all the livestock and equipment will be included in the valuations meaning far more farms will be hit with CGT than RR said.

Stupid move on RR part. 6000 farmers at a rally near Belfast last night and they are threatening to take action. I think this is going to be a major row.

And I believe they have full backing from the NFU. Won't end well if you know many farmers!

https://www.bbc.co.uk/news/articles/clygwpe17evo

I know lots of farmers (extended family included) so my FB feed is full of profile picture changes and photos, have to admit it does aggrieve me a bit as the ones I know well are very affluent, with SAHM’s and who live in houses built on their vast estates (no mortgage). But I don’t understand the tax position enough to make a better judgment - but for the reasons above I can see why public sympathy might be light. That and so many are quietly selling land to developers who are land banking.

You left out they have up to 3 million untaxed, they'll have 10 years to pay and it's half normal inheritance tax.

The issue will be breaking up farmland. Watch Yellowstone.

@Janedoe82 is that not a hypothetical issue though? As if they have ten years to pay it won’t be the only way to raise the cash.

Rachel Reeves has done her sums wrong and decided to lump in small holdings and hobby farms in with normal family farms and tax dodging millionaires.

As a result she's assumed that most family farms will be below the IHT threshold because she's classed all the little non viable farms as farms and averaged out the normal family farm as having 88 acres which is absolute nonsense.

There is also massive lack of understanding that when a farm gets passed down its not as cash it's land that is passed down, usually to the next generation who is already farming it and supporting a family from it. If each time it gets passed down a bit has to be sold off to pay IHT then it stops being viable in easily a generation.

As a tenant farmer I don't really have skin in the game, but we tenant a 300 acre farm and can just about make a living for one family from it, plus my extra part time wage from an off farm job.

it's not just about IHT either, IHT has just been the final straw.

@SunQueen24 I’m a farmers daughter, it’s a pretty complicated situation. Lots of the family farmers I know are actually not completely against some sort of inheritance on the very wealthy farms. Its just that depending on the situation it may be that relatively small farms which are not raking it in may have to be broken up/families giving up farming upon the death of the owner.

It’s a combination of no consultation, and a lack of nuanced policy (for instance lots of small holdings get to use the exemption when it’s just in use for keeping horses or pets on, not good production) the farmers I know would be ok with those sorts of properties not being able to use the exemption.

20% of 3 million is £600000. Even over ten years thats 60k per year. How much profit do you think farms make? they are asset rich and cash poor.

It's jeopardising our food security.

That argument only holds water if all farmland that is sold off if no longer farmed. That seems highly unlikely to me. Whoever buys it is probably going to continue to produce food.

@Scrowy and @GrazeConcern thank
you for the useful explanation.

However, there are notable caveats: farmers may avoid the tax by transferring property at least seven years before death. Many will also be able to take advantage standard household tax allowances if the farm is owned by a couple, potentially pushing up amount they can pass on tax free to £3 million.

Who will be affected?
DEFRA secretary Steve Reed has said “Only the richest estates will be asked to pay – not small, family farms”. According to the Chancellor, 72% of farms won’t be affected, with the treasury estimating that just 500 farms per year expected to pay more tax. This is a figure based on the previous annual number of claimants of APR.

https://www.sustainweb.org/blogs/nov24-farming-budget-inheritance-tax-apr/

I think the issue with food security is that this is seen as the straw that breaks the camels back. Food security and prices are already on a knife edge due to weather, losing subsidy (and no, not all farmers voted for Brexit, and the NFU did support remain), increased fertiliser and seed costs (set to get worse with green taxes).

I personally think the inheritance issue requires a nuanced conversation to prevent wealthy non farmers using it as a tax loophole, but family farms are a backbone of some areas of rural economies. And farmers (not always the same as a land owner) are some of the most hardworking, dedicated, stressed out people in our society, they deserve to be at least heard and understood.

I think that in a way thats similar to VAT on Private schools Labour has assumed that ALL farmers are the same and all of them are tax avoiding wealthy land owners. They have also not done their sums properly AGAIN.
They have also gone after another group who their core supporters probably hate for reasons not unrelated to envy.
So in summary - Labour are clobbering farmers to get to the likes of James Dyson and Private schools to to get the likes of Eton

although I'm a tenant farmer I know plenty who aren't, and they are just normal people on normal family farms of about 250 - 400 acres, a farm house, several sheds, farm machinery and their livestock, feed fertiliser etc. they will be subject to IHT because of the value of the land.

The kids go to the local primaries and secondaries, the farmer drives a pick up as that's what needed as a farmer (as do we as tenants), they shop at Morrisons and Aldi and the partner usually has a second job off the farm.

it's a common discussion at get together that the wife's second job is what they actually live off as the farm basically breaks even or makes a small profit. Most farmers don't take a wage they just take drawings from the profit.

this whole idea that farmers are driving round in swanky cars and sending kids to private school is utterly alien to me and any farmer I know, I appreciate that some people in some areas may have that experience but it's like saying that all business owners are the same as Alan Sugar!

Farmers are full of an inflated sense of self importance and think that they shouldn’t have to pay tax in line with the rest of us. Cheeky entitled fuckers.

It's already happening.

Since Brexit there are no longer farm subsidies for food production there are environmental payments for taking land out of food production and rewilding instead.

add on to that companies like sainsburys buying land to plant trees on to offset their carbon emissions, or put solar panels on.

Planning regs have basically been thrown out of the window and agricultural land is being snapped up for house building everywhere.

It's 20% on the amount over £3m. So if the farm is worth £4m the tax would be 20% of £1m, so £20k a year for 10 years, interest free (and IHT on a £3m farm would be £nil).

In part I can see why people want farms treated the same as any other family business. And closing tax loop-holes is
Important. But selling off business assets to meet IHT isn't going to be viable. So whilst I think something needed to be done, I don't think this is right.

@SometimesCalmPerson tbf we’d be malnourished or possibly dead without them. Have you ever tried to grow/raise your own food?!

That said I’ve not met a farmer who thinks they should avoid tax in its entirety. And I’ve never met a business person or an investor who is willing to invest on an asset with a likely yield of 0.5%.

Farmers can gift the farm to children 7 years before death to avoid inheritance tax. So surely most farmers could do this?

It's not CGT, it's inheritance tax. Agricultural property has previously been wholly exempt from IHT. The new arrangement is that if the taxable value of the agricultural property is more than £1m then IHT will need to be paid on it by the estate. Bearing in mind each individual has a tax free allowance for IHT of £1m if the estate includes a property and married couples can share any allowance not used on the first death as all bequests to spouses are exempt, the typical farm jointly owned by a married couple would need to be worth over £3m before triggering an IHT charge on transfer to children.

There is also the option of gifting the farm to children during your lifetime. If you then survive 7 years the transfer is not chargeable.

Just some background to put things in context. There has been a lot of strong feelings on this subject and it's important to be clear about exactly what is changing.

There used to be business property relief, so other businesses had some tax relief too.

You’ve misunderstood. It can’t be broken up and made into smaller farms. You have to have so many acres to make it viable.